Malaysian low-cost carrier AirAsia and Viet Nam’s Thien Minh Group on Thursday signed a memorandum of understanding (MoU) to launch a new low-cost airline in Viet Nam.

Under the MoU, the two sides will invest in aircraft to form a fleet for the new airline.

According to Thien Minh Group’s CEO Tran Trong Kien, the fleet will mainly consist of Airbus A320s and A321s, both short- to medium-range, narrow-body aircraft.

AirAsia will own 30 per cent of the new venture, the maximum allowed for foreign ownership of an airline under Vietnamese law, though the authority is considering lifting the limit to 49 per cent.

AirAsia expects the joints venture to focus on underserved routes connecting key cities including Ha Noi and HCM City, while also flying to Southeast Asia, China, the Republic of Korea and Japan from HCM City, Ha Noi and Da Nang.

"We expect to enhance our contribution to Viet Nam’s aviation and increase locals in one of the most promising markets in the region," AirAsia CEO Tony Fernandes said on the news website Nikkei. — VNS